Cornerstones of Financial Accounting

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Author: Jay Rich, Jeff Jones

Publisher: Cengage Learning

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Cornerstones of Financial Accounting

Operating Assets. 47E

BusinessAccountingCornerstones of Financial AccountingStraight-line Depreciation: Depreciation is done by allocating the cost of the fixed assets other than land to expense over the useful life of the asset. The most commonly used method of depreciation is straight line method. In this method every year until the useful life of the asset, equal amount of assets cost to depreciation expense is allocated. The formula to calculate straight line depreciation is: Straight line depreciation = (cost − residual value) / expected useful life Double declining balance method: In this method depreciation the book value of an asset declines every year by the constant depreciation rate and hence the depreciation amounts are larger in the initial periods of asset’s life but becomes relatively smaller in the later years. This method is applied for those assets which become obsolete due to technological changes. Units of production method: In this method the depreciation expense is determined on the basis of the usage of asset. Once the company estimates the usage rate of the asset then the depreciation expense is calculated based on the usage rate. Match the depreciation methods with each of the given characteristics.

Question

Chapter 7, Problem 47E

To determine

**Concept introduction:**

**Straight-line Depreciation:**

Depreciation is done by allocating the cost of the fixed assets other than land to expense over the useful life of the asset. The most commonly used method of depreciation is straight line method. In this method every year until the useful life of the asset, equal amount of assets cost to depreciation expense is allocated. The formula to calculate straight line depreciation is:

Straight line depreciation = (cost − residual value) / expected useful life

**Double declining balance method:**

In this method depreciation the book value of an asset declines every year by the constant depreciation rate and hence the depreciation amounts are larger in the initial periods of asset’s life but becomes relatively smaller in the later years. This method is applied for those assets which become obsolete due to technological changes.

**Units of production method:**

In this method the depreciation expense is determined on the basis of the usage of asset. Once the company estimates the usage rate of the asset then the depreciation expense is calculated based on the usage rate.

Match the depreciation methods with each of the given characteristics.

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Cornerstones of Financial Accounting

4th Edition

ISBN: 9781337690881

Author: Jay Rich, Jeff Jones

Publisher: Cengage Learning

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Cornerstones of Financial Accounting

Operating Assets. 47E

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Cornerstones of Financial Accounting

Ch. 7 - Prob. 1DQCh. 7 - Prob. 2DQCh. 7 - Prob. 3DQCh. 7 - Prob. 4DQCh. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - Prob. 8DQCh. 7 - Prob. 9DQCh. 7 - Prob. 10DQ

Ch. 7 - Prob. 11DQCh. 7 - Prob. 12DQCh. 7 - Prob. 13DQCh. 7 - Prob. 14DQCh. 7 - Prob. 15DQCh. 7 - Prob. 16DQCh. 7 - Prob. 17DQCh. 7 - Prob. 18DQCh. 7 - Prob. 1MCQCh. 7 - Prob. 2MCQCh. 7 - Prob. 3MCQCh. 7 - Prob. 4MCQCh. 7 - Prob. 5MCQCh. 7 - Prob. 6MCQCh. 7 - Prob. 7MCQCh. 7 - Prob. 8MCQCh. 7 - Prob. 9MCQCh. 7 - Prob. 10MCQCh. 7 - Prob. 11MCQCh. 7 - Prob. 12MCQCh. 7 - Prob. 13MCQCh. 7 - Prob. 14MCQCh. 7 - Prob. 15MCQCh. 7 - Prob. 16MCQCh. 7 - Prob. 17CECh. 7 - Prob. 18CECh. 7 - Prob. 19CECh. 7 - Prob. 20CECh. 7 - Prob. 21CECh. 7 - Prob. 22CECh. 7 - Prob. 23CECh. 7 - Prob. 24CECh. 7 - Prob. 25CECh. 7 - Prob. 26CECh. 7 - Prob. 27CECh. 7 - Prob. 28CECh. 7 - Prob. 29BECh. 7 - Prob. 30BECh. 7 - Prob. 31BECh. 7 - Prob. 32BECh. 7 - Prob. 33BECh. 7 - Prob. 34BECh. 7 - Prob. 35BECh. 7 - Prob. 36BECh. 7 - Prob. 37BECh. 7 - Prob. 38BECh. 7 - Prob. 39BECh. 7 - Prob. 40ECh. 7 - Prob. 41ECh. 7 - Prob. 42ECh. 7 - Prob. 43ECh. 7 - Prob. 44ECh. 7 - Prob. 45ECh. 7 - Prob. 46ECh. 7 - Prob. 47ECh. 7 - Prob. 48ECh. 7 - Prob. 49ECh. 7 - Prob. 50ECh. 7 - Prob. 51ECh. 7 - Prob. 52ECh. 7 - Prob. 53ECh. 7 - Prob. 54ECh. 7 - Prob. 55ECh. 7 - Prob. 56ECh. 7 - Prob. 57ECh. 7 - Prob. 58ECh. 7 - Prob. 59ECh. 7 - Prob. 60ECh. 7 - Prob. 61ECh. 7 - Prob. 62ECh. 7 - Prob. 63ECh. 7 - Prob. 64ECh. 7 - Prob. 65ECh. 7 - Prob. 66ECh. 7 - Prob. 67ECh. 7 - Prob. 68APSACh. 7 - Prob. 69APSACh. 7 - Prob. 70APSACh. 7 - Prob. 71APSACh. 7 - Prob. 72APSACh. 7 - Prob. 73APSACh. 7 - Prob. 74APSACh. 7 - Prob. 75APSACh. 7 - Prob. 76APSACh. 7 - Prob. 68BPSBCh. 7 - Prob. 69BPSBCh. 7 - Prob. 70BPSBCh. 7 - Prob. 71BPSBCh. 7 - Prob. 72BPSBCh. 7 - Prob. 73BPSBCh. 7 - Prob. 74BPSBCh. 7 - Prob. 75BPSBCh. 7 - Prob. 76BPSBCh. 7 - Prob. 77.1CCh. 7 - Prob. 77.2CCh. 7 - Prob. 78.1CCh. 7 - Prob. 78.2CCh. 7 - Prob. 79.1CCh. 7 - Prob. 79.2CCh. 7 - Prob. 79.3CCh. 7 - Prob. 80.1CCh. 7 - Prob. 80.2CCh. 7 - Prob. 80.3CCh. 7 - Prob. 80.4CCh. 7 - Prob. 80.5CCh. 7 - Prob. 80.6CCh. 7 - Prob. 80.7CCh. 7 - Prob. 80.8CCh. 7 - Prob. 81.1CCh. 7 - Prob. 81.2CCh. 7 - Prob. 81.3CCh. 7 - Prob. 82.1CCh. 7 - Prob. 82.2CCh. 7 - Prob. 82.3CCh. 7 - Prob. 82.4C

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Similar questions

An accelerated depreciation method that takes more expense in the first few years of the assets life is ________. A. units-of-production depreciation B. double-declining-balance depreciation C. accumulated depreciation D. straight-line depreciation

Depreciation of a plant asset is the process of ________. A. asset valuation for statement of financial position purposes B. allocation of the assets cost to the periods of use C. fund accumulation for the replacement of the asset D. asset valuation based on current replacement cost data

Using the information from EB7, calculate depreciation using the straight-line method.

Which of the following represents an event that is less routine when accounting for long-term assets? A. recording an asset purchase B. recording depreciation on an asset C. recording accumulated depreciation for an asset or asset category D. changing the estimated useful life of an asset

Which of the following depreciation methods will result in the most depreciation expense over the life of an asset?
Select one:
a. Double-declining balance method
b. All three methods will result in the same amount of depreciation expense.
c. Units-of-production method
d. Straight-line method
e. Cannot be determined from the information given.

The method of depreciation which is also known as Accelerated depreciation method is
a.
Diminishing balance method
b.
Units of production method
c.
Double declining depreciation method
d.
Straight line method

The write-off of the cost of an intangible asset is called
a.deterioration.
b.functional depreciation.
c.physical depreciation.
d.amortization.
The write-off of the cost of plant and equipment is called
a.amortization.
b.depletion.
c.depreciation.
d.deterioration
The depreciation method in which the depreciable cost of an asset is apportioned equally over its estimated life in terms of months or years is called the
a.straight-line method.
b.declining-balance method.
c.sum-of-the-years'-digit method.
d.units-of-production method.

Which depreciation method ignores residual value when computing the depreciable base of an asset?
a. sum-of-the-year's-digits
b. double-declining-balance
c. composite depreciation
d. group depreciation

The depreciation method in which the depreciable cost of an asset is apportioned equally over its estimated life in terms of months or years is called the
a.units-of-production method.
b.straight-line method.
c.declining-balance method.
d.sum-of-the-years'-digits method.

Which of the following is considered when depreciating an asset under the cost model?
The cost of the asset. The change in the fair value of the asset.
The useful life of the asset. Both a and b.
Which of the following depreciation methods will most likely result in the highest amount of reported profit in the early years of an asset’s useful life?
Straight line 150% declining balance
Double declining balance Sum-of-the-years’ digits
The most commonly used depreciation method is the
straight-line method. replacement method.
depreciation method based on revenue. inventory method.

The depreciation method in which the depreciable cost of an asset is apportioned equally over its estimated life in terms of months or years is called the
a.straight-line method.
b.declining-balance method.
c.sum-of-the-years'-digit method.
d.units-of-production method.

Blueprint Connection: Depreciation Methods
Depreciation is the process of allocating the cost of an asset to expense over the asset's estimated useful life. The amount depreciated is the cost of the asset less the asset's expected residual value.
An accelerated depreciation method allocates larger amounts of depreciation expense to earlier periods of an asset’s life and smaller amounts of depreciation expense to later periods of an asset’s life. Straight-line depreciation allocates an equal amount of the asset’s cost to depreciation expense for each year of the asset’s useful life. Units-of-production depreciation is used primarily to depreciate machinery and allocates costs based on the actual use of the machine to produce product. While these methods allocate a different amount of depreciation expense to each year of an asset’s life, the total amount of depreciation expense recognized over the asset’s life is the same under either method.
Select the depreciation method…

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